Apollo highlights stagflation concerns as the Fed balances inflation and jobs risks for 2026:
Apollo Asset Management chief economist Torsten Slok says Federal Reserve officials are increasingly focused on the risk of stagflation as they look toward 2026, a scenario marked by slowing growth alongside rising prices.
Slok’s view reflects how policymakers describe economic risks in forecasts prepared ahead of Federal Open Market Committee meetings.
As part of that process, FOMC participants are asked to judge whether inflation and unemployment risks are tilted to the upside or downside relative to their baseline outlook. Recent projections show a notable shift: officials broadly see greater upside risk to both inflation and joblessness, an unusual and concerning combination.
Slok notes that those assessments suggest the central bank is wary of a period in which price pressures fail to cool even as labor market conditions weaken. Such an outcome would complicate monetary policy, limiting the Fed’s ability to stimulate growth without exacerbating inflation.
While the Fed’s baseline forecasts do not assume stagflation as the likely outcome, the balance of risks indicates policymakers are preparing for that possibility. For investors, the message seems to highlight that the economic path into 2026 may be challenging, with uncertainty around growth, employment, and inflation.
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